Method of discounting penny flows. Discounting penny potik Discounting penny potik Formula

The discounted penny flow is the financial flows associated with various projects and adjusted to the way they are distributed over time and the potential amount on the penny deposit. Here it is very important to embrace the time-hour aspect, as much as possible investment projects are characterized by the fact that the main expenses and capital gains are from the first generation, and the income from the new ones, like penny inflows, will be distributed many times in advance.

Economical significance

The performance of a company depends on the main factors, such as the performance of assets on the market, as well as the amount of income that is derived from the effective implementation of activities at the current moment. The method of potential investors is to snatch away a completely specific income from their capital. Therefore, the profitability of the functioning of the organization is even important moment Not only for investors, but also for investors, so they should take care during the implementation of valuation work in order to determine the risk of business.

The method of discounting penny flows has become one of the most commonly used methods in assessing the value of characteristics. This approach is relevant due to the fact that the process of managing penny flows for all parties is of utmost importance: for this purpose, it is possible to maintain business profitability, increasing the financial strength of the company itself ii. Discounting the penny flow of the building will show income and expenses from the adjustment of depreciation and amortization, accounts receivable, capital investment, changes in structure werewolf costs the company itself. There is also a lot to be gained from this method for rozrakhunki.

Yak vikoristovati?

Empirical data have shown that the discounting penny flow occurs in the first place with the venturing of the enterprise on the market, but the income in the accounting books is not related to the venturing of the market, and even the first is not may in the future be the primary factor in the success of entrepreneurship.

When vikoristanna this method rozrakhunok vartosti take part in the singing rite. Analysis and forecasting of gross income, investments and expenditures, distribution of financial flows for every financial market are carried out, discount rates are calculated, and then obvious penny flows are discounted, and the distribution of excess cash flows is carried out. After all, it is necessary to estimate the exact value of future cash flows from excess value, to speed up and verify the results.

Raznі options for rozrakhunku

The method of discounting penny flows allows the use of two types of investment capital for the expansion of enterprise capital: capital and investment capital. If we talk about power capital, then the most important showman This is the level of value of the collected data for the receiving company, since it is taken to respect the needs of the company from the received pennies worth. In practice, the non-borrowing penny stream is used by investors to finance the investment, purchase or liquidation of companies for the benefit of new funds from investors.

The release of the discounted penny flow for the capital of the company is carried out in a special way. To the net profit for the current period, the depreciation and change in the long-term debt are added, and from the amount withdrawn, the capital investment for the period and the increase in the working capital of the enterprise is added. It is important to understand that penny flows are forecast for the next 5 years. The likelihood that there will be songs of joy in the forecast is high, so there is a whole spectrum of forecasts: optimistic, pessimistic and the most optimistic. For the skin to be irritated, tightness is of utmost importance and a specific barrier is indicated. The penny flow for cash and position capital can be either nominal or real. The discounted value of the penny stream is indicated at the end or in the middle of the fate. Otherwise, the result will be more accurate, which is why it will be shorter.

Discount rate

In the process of determining the discount rate, it is necessary to consider what they consider as the lower boundary level of the profitability of investments, sufficient for the investor to fully invest his assets in the company, especially when investing and the visibility of the possibility of alternative investments that transfer income from a high level of risk . The risk here is the certainty of the uncertainty of actually denying the results, and leading to a waste of power through the bankruptcy of businesses, economic and political officials, and so on. oh nature.

What are you going to do?

If the net penny flow of payments is discounted, it will reveal the amount of business income that will occur in the post-forecast period. It’s important to make sure that too much profit is the same as the penny flow, which is taken away after a discrete forecast period. Before it, the varity of all flows of financial assets is included in all periods that were lost beyond the scope of one forecast fate. The increase in excess varosti can be achieved using one of the methods.

For the method of estimating the value of net assets, it is necessary to calculate the surplus value as compared to the surplus balance sheet value at the end of the period. For a profitable business, using this method is inappropriate.

To assess liquid market value, it is necessary to develop this indicator for assets at the end of the forecast period. And the totality of officials who infuse liquidity. Here you can see the low profitability through the unknown from the outside looking in, Galuzev factors and territorial distribution.

Visnovki

To complete the assessment for a current business, you can use both penny flow discounting and market or cash flow discounting. With this help, you can discover various parts of subjectivity, which will make your business assessment more accurate.

It is necessary to assess business power from various factors, such as current sales or analysis of investment risks. It is possible to determine the level of control over the level of all assets that are under control. Any business is not without its main functions, but first and foremost is the income that it brings or can bring.

It is not enough to estimate what kind of financial flow from the current date of business and may be expected to enter before the new one, it is also necessary to compare these penny flows with the present hour, from this, in order to determine how much is up to date the current price that needs to be paid, with the predicted profit from the future.

We will briefly look at the method of discounting penny flows (PDF), which is used to assess the value of a business.

The essence of the method of discounting penny flows

The method of discounted penny flows (the English version of the name "discounted cash flow method") is an analysis of the value of business power, based on the assessment of the estimated income from the assets that are being assessed.

Discounting means the concept of the real relationship of future penny flows, which can date the power that is being assessed, and these pennies on today's day.

The economic law of the decline in the value of pennies shows that at this time for the same amount you can earn less than in the future. Sense discounting – at the choice of point present moment, before the release of the recovered financial flows, such as profits and surpluses, is achieved. For whom should I stagnate discount rate (coefficient, rate) What is the output from penny flows, that is their profitability.

An important indicator is also time-sensitive: over many years, income forecasts are guaranteed.

Scope of application to the method of discounting penny flows

The method of discounting penny flows is considered universal, as it allows one to determine what future income is expected to be. The flows of pennies may be shallow, the profits may change into surpluses, and their dynamics may not be reversed any time soon. Once again, you can appreciate the added power by looking at the advantages that you may have in the future.

It is absolutely necessary to define the DDP method as follows:

• Let us take into account that current penny flows can change dramatically;
• Information about the valuation object is sufficient to forecast future profits (or surpluses);
• financial flows are heavily influenced by seasonality;
• the subject of assessment is a commercial object great quantity possible functions;
• The inviolability that is being assessed is carefully encouraged or put into operation.

IMPORTANT! In addition to the obvious advantages of the method, it is necessary to take into account factors that can reduce its reliability: the possibility of mercy in these forecasts and the so-called sympathy of the evaluator.

More practical than the DDP method

To forecast future penny flows, they are reduced to current moment The following data is required:

• profitability (penny flows themselves);
• terms of development;
• discount rate.

Let's take a look at the basics of the investment algorithm using the method of discounting penny flows.

The output value for discounting penny flows

The basis for the expansion is profitability, which is the real penny flows from the power that is being assessed. Insurance " pure free penny flow", then these are the funds that will be lost from the authorized government after the recovery of all expenses, including investments.

Forecast terms

The significance of the developmental period is included in the information about the object of assessment. If they are sufficient, in order to make forecasts for a trivial term, you can choose a more trivial period of time or increase the accuracy of the estimate.

In the context of Russian economic realities, the average term has less accurate economic forecasts to become 35 years old.

Discount coefficient rate

This is to bring the amount of income up to the production hour shodo vartosti. For this purpose, the cash flows must be multiplied by the discount rate, which is the established rate of return, which can be calculated by the investor who invests the money in the valuation object. When the bet is set, the following factors are used:

• inflation rate;
• profitability of assets that do not transfer financial risks;
• profit for rakhunok riziku;
• refinancing rate;
• vіdotok for credit deposits;
• Average value of capital and in.

The discount coefficient is calculated using the following formula:

Kd = 1 / (1 + CD) N t

• K d - Discount coefficient;
• SD – discount rate;
• Nt – number of the time period.

The procedure for drying out the DDP method

To adequately evaluate the DCF method, it is necessary to follow such an algorithm, which has proven itself in evaluation practice:

1. Select the evaluation period. As was previously expected, for Russian companies, 35 losses may be exceeded, since the global practice of vikoryst significantly increases the period of assessments with the help of reducing the number of uncontrolled officials.
2. The value of the dosledzhuvanogo type of penny flow. It is possible to estimate the magnitude of penny flows on the other side (income and cash flows) by analyzing the financial situation (flows and forecasts) and the real market situation with the accuracy of forecasts. Several types of income are covered, including:
   • effective gross income (for the recovery of the tax on the inviolability and administrative expenses of the ruler);
   • possible gross income;
   • net operating income (for the calculation of capital investments and service payments);
   • penny flows before and after taxes are paid.

Depreciation in the presence of flows is not covered. It is advisable to take into account the flows of the skin for the forecast period.

DOVIDA! In the Russian Federation, the most common choice for the DCF method is not the flows themselves, but the net operating income without the burden of debts, taxation of profits and ready flow from the recovery of operating expenses.

3. Rozrakhunok reversion- Excessive value of the valuation object after income ceased to be received. Reversion can be approximately calculated using the following:
   • improvement of the availability of similar objects on the ham market;
   • forecasting the market situation;
   • independent development of the capitalization rate - income over the period occurring after the end of the forecast period.
4. Calculation of discount rates. The tricky part of this plan is to correctly calculate the discount rate, which is the rate of income. For which there are more than 10 economical methods, which have low benefits and disadvantages. The optimal method is selected for a specific skin condition. Accountants of the Russian Federation give preference to the cumulative method (adding up all risks). In modern practice, the most common methods are:
   • the leveling of alternative investments – most often stagnated in the assessment of inviolability (the rate is based on profitability, which is set by the investor, and income from other projects of the same investor);
   • vision – a composite number of areas similar to similar objects above the market is calculated;
   • monitoring – is carried out on a regular market for the analysis of investments in inviolability, the rate is determined by a clear alignment of the data of indicators.
5. The use of the DDP method for calculating output indicators. To calculate the calculation, use the formula:

DDP = ∑ N t = 1 DP / (1 + Sd) t

• DCF - discounted penny flows;
• DP – penny flow in selection period (t);
• SD - discount rate (rate of income);
• t - time-hour forecast period;
• N – number of forecast periods for the manifestation of penny flows.

Discounting penny flows is a reduction of financial flows for different hourly periods up to the present hour. This is the basis for the development of financial security with the approval of the time official. This principle is based on one of the basic economic laws, and that itself is the value of money, which changes (inflation). In other words, over time, cats spend their virtuousness, as they grow up with that which is at once. That's why we're taking responsibility at the moment. Discounting is necessary to carry out deconstruction.

Discounting of penny flows – what is it?

Before going into more detail about what the discounting of penny flows is, it is important to understand some fundamental concepts. So, for example, under the discount factor, they are subject to the process of creating flows at different hourly intervals.

The discount rate is an indicator that reflects the profitability of an investment. What is missing from the penny flow is the money that was lost after all the flow of spending was collected (including spending on investment activities). Without any understanding of these terms, they would collapse without meaning.

The main essence of this technique is simple and consists of four points:

1. We first need to forecast penny flows for the next hour (5-10 years), which is called the forecast period.
2. In a different way, the forecast is formed for the hourly surge that follows the forecast, which concerns an unknown period. It is called the forecast period.
3. Thirdly, it is necessary to raise the rate such that at the final stage all future financial flows will be brought to the present hour.
4. Fourthly, we add up all the previous results, after which we can remove the correct control.

Discounting: analysis techniques

Respect Varto, scho Rozrahunkov's formula The calculation of DCF (discounting penny flow) is similar to the NPV formula (net discounting flow). The main importance lies in the receipt of initial investment costs from the NPV category.

DCF is consistent with many methods for assessing the effectiveness of investments. They are often called dynamic through the use of discounted penny flows.

Discounting of penny flows: coefficient and legal formula for rozrakhunka

This is the understanding of how the discounting factor stagnates in situations where it is necessary to bring future income to a realistic level. Who will benefit from an increased discount rate and multiplication of payment flows. There is a simple formula behind which the higher the coefficient is insured.

The indicator r of representations is the discount rate. And the indicator, in its own way, indicates the number of the time period.

There is a legal formula for the expansion of the discounting of the financial flow. So, DCF is defined as a real penny flow. The CF value is assessed as a financial flow in the first period of time. The rate of income and the discount rate are calculated with additional help r. This number indicates the number of hours during which financial flows occur.

The discount rate itself plays an important role and is the main element in predicting the basic formula for discounting financial flows. This rate immediately indicates the rate of return for the investor. It works when an investor contributes funds to a new investment project.

The rate includes a lot of factors that are included in the assessment objects:

1. The inflation part.
2. Income from assets, which is not caused by risks.
3. Profit rizik.
4. I’ll tell you the exact refinancing rate.
5. Average value of capital.
6. Hundreds of deposits at the bank.

Methods of analysis for which discounted penny flows are stagnant

Once you analyze the basic formula for the distribution of discounted financial flow, you can note that the value of the discounted flow itself is similar to net discounted income. Net discounting profits are generally designated by the abbreviation NPV. Their significance is indicated in the formula of the first expenses for investments.

This way, like discounting a penny stream, it becomes difficult to finish it often. This is mainly used when assessing the effectiveness of various investment projects. All situations in which the discounting of the financial flow stagnates are dynamic. An example of similar methods for assessing the effectiveness of any investment projects:

• internal profit rate;
• profitability index;
• the net profitability of the future is the rate of income;
• discounting the payback term for the project.

Advantages and disadvantages of discounting

The main advantages of the analyzed method are clarity, logic and simplicity. This technique is based on the hypothesis that there is a connection between the price of an organization and its ability to create financial transactions. It is best suited for making a forward assessment of the profitability of current companies.

However, the technique has its shortcomings:

• the calculation of the discounted financial flow has been advanced, which may extend until the hour after the forecast;
• It is practically impossible to transfer economical and other indicators for a very short period of time (more than one day), in which case the technique is characterized as the ability to transfer for an uninterrupted period;
• there is a serious backlog of the calculation results from ear indicators (both penny flows and discount rates are involved). Making minor changes by 1-2 points can increase the organizational performance by 10-20%.

As the restructuring is carried out, it is assumed that shareholders can spend penny flows on the authorities, although in practice this rarely happens.

If you want to live insignificantly for a short time, if you take the right in bad faith and pay your dues, then in the future the problems may be serious.

Assessing the strength of hearing loss is a complex, economical task, which comes down to the establishment of a variety of methods and methods for identifying effective value. Most often the zastosuvanna respects penny flow discount method, that vikoryst is not only in Russian activity, but also behind the cordon.

The essence of the technique

This method is used to calculate the discounted price of financial expenses, transfers to the object of hearing loss in the future. A similar method can be used for the obvious influence or changes of minds that, after a period of time, the money spent on money is constantly changing from the current ones.

With the use of the DDP method, in order to predict the level of profitability in the most intensive methods of vicorization of the indestructible mine, a breakdown is carried out on the basis of the number of rocks and in the obligatory order there will be a forecast of revenue from the implementation of the project, which will be assessed after the end of the term. This technique works best with instability in income.

In addition to the method є:

• Is dreaming priming signs penny flows from the nearest future;
• є information that allows predict the rate of upcoming events;
• beware seasonality recovery of funds;
• how the object of indestructibility appears large commercial structure;
• Please, what is being evaluated? at the stage of development and commissioning.

The method of discounting penny flows is a method that allows predict as accurately as possible the magnitude of future expenses.

The rest may be affected by their instability and unevenness of operation. The investor, at the time of investment, is tempted to look at the object for possible benefits and profitability, paying a penny equivalent to the obvious profits from the view of their correlation with the price of the gain.

The effectiveness of this method and its superiority over other methods of increasing profitability lies in the form a whole complex of parameters and their mutual relationship I. These parameters include capital flow and flow, capital investment, receivables, and structural changes.

If you look at the indicators of pure profit, either direct or indirect, they do not allow you to operate the table with a large set of parameters.

Vartis assessment methods

The current economy is different, which makes it possible to assess the quality of the object of the unbroken lane.

1. . A similar technique is used in the event of immediate liquidation of infirmity or for obvious changes of mind before the impending bankruptcy and the impossibility of continuing activity;
2. . The method is considered to be a method of assessing existing objects of inaudibility or, in the case of short-term activity;
3. Pributkovy. This group of techniques itself includes a method of estimating the additional discounting of penny flows. The same rice by the method of DDP of the same vision is the groove of the organized organs, they are normally functioning at the Tsoma Etapi, I plan to plan the robot of the Nadali, the Otkubachi otrimymanni Probutka.

The main stages of assessment using the DCF method

Estimation of the DDP method transfers the assessment of a number of stages.

Stage 1 Viznachennya triviality of the forecast period. At which stage you should evaluate the cost, during which you will estimate the amount of money that is needed. Due to the instability of the Russian economy on the territory of the Russian Federation, the average severity of the assessed period does not exceed 3-5 rocks, Sunset terms are troubling. The terms that are used will be sufficient for the current forecast;

Stage 2 Forecasting specific quantities. This means that the investor will benefit from the following:

• Carrying out analytical work on data sources from the data manager O financial sector . This includes data and income statistics for the retrospective period in relation to the selected object;
• assessment The current situation in the hearing loss market characteristics of dynamic changes;
• folding forecasted breakdowns about revenues, profits and sales, focusing on the reconstruction of accounting documents.

In the Russian economy, instead of the procedure for discounting penny flows, it is important to discount income, including:

• net operating income, which is stagnant to the point of being inaudible, not burdened by goiters;
• clean cooking flow, what is needed to ensure the recovery of the recovered income of all types of expenses;
• subsidies profit.

Stage 3 Pidrahunok Varosti reversi×. Reversion is Excessive varity of the object, which is established with the shortened or constantly accelerated generation of penny flows. The actual performance of this indicator can be predicted in the following ways:

• Establishment of the sales price of the object based on market conditions, medical prices for similar hearing loss and try the forecast of the Varosti of the indestructible lane in the future;
• rozrakhunku kolivan prices for inviolability during the Volodin period;
• capitalization of income for the financial river, which goes beyond the end date of the forecast period from the values ​​of the capitalization rate independently;
• higher discount rates. The discount rate is a value determined based on the number of stocks that were taken from the future.

The discount rate at the end of the day is determined by the regulation of the “risk-income” link, which includes the entirety of possible risks, power indestructible lane. The level of liquid investments, compensation expenses, and the visibility of the investment management system are also insured.

Stage 4 Rozrakhunok discount rates. The purpose of this procedure is to determine the amount of financial payments that will be withdrawn or paid after the end of a given period of time. This indicator makes it possible to increase the correlation factor until the profitability of the object that is being evaluated. There are three methods of development, selecting certain types of penny flows:

• for power capital vikorystsya cumulative methodology with asset valuation(CAPM method);
• for positive and investment sums The assessment is based on the adjustment of the value of the average value of capital.

In foreign economics, the discount rate is important to be calculated in a cumulative manner. The choice of this method is based on the simplicity of calculation and the ability to accept it before the situation over the market deteriorates.

Stage 5 Without middle calculation using the DCF method.

In case of degeneration, a formula like this becomes stuck:

PV – varity, which is indicated,

C t - Financial needs at time t,

i – discount rate that applies for the period of hour t,

R - reversal speed,

n - the severity of the forecast for rocks.

When calculating, two points need to be taken into account:

• when calculating the return value of the reversion, discount the final rate of addition to the amount of the deposit;
• Upon completion of the expansion of the bag, the supply must be kept in mind due to the values ​​of the flow reversal and the estimated prices of future pennies.

Butt design of the object

For example, the following task is presented:

The buyer buys inviolability from the authorities for the future and rents for the next three years from a fixed amount for hiring. For the first term, the rent is 12,000 penny units, the other price is 14,000, for the third investor the cost is 16,000 penny units. It is reported that the value of the indestructible object is approximately 100,000 penny units. The problem requires knowing the exact price at the initial discount rate of 11%.

We first need to calculate the discount rates for skin cancer:

1 rik = 12 thousand. / (1 +11%) = 10,810.81 penny units;

2 rik = 14 thousand/(1+11%) = 12612, 61 penny units;

3 rik = 16 thousand. / (1 +11%) = 14,414.41 penny units.

4 rik = 100,000/(1+0.11) = 90,090.09 penny units.

Otzhe, PV = 10,810, 81+12,612, 61+14,414, 41+90,090, 09=127,927, 92 penny units.

The main advantage of this method is the ability to change the price of the company and roughly predict the size of the future Their penny streams.

p align="justify"> The DCF method practically cannot cope with periods of instability in the generation of financial income, otherwise the dispersion of balances during calculations significantly increases.

What is discounting?

The video below clearly explains what discounting is.

Do you know what discounting means? If you read this article, you will already hear this word. And since you have not yet fully understood what it is, then this article is for you. If you don’t want to eat Dipifre, but just want to learn about nutrition, after reading this article, you can clarify for yourself Concept of discounting.

This article, accessible to me, tells about those what is discounting | On simple butts she shows the technique of breaking up discounted warts. Do you know what the discount factor is and learn to use it?

I understand that discount formula is available to you

To make it easier to explain the concept of discounting, let’s start from the other end. Or more precisely, let’s take an example from life, familiar to everyone.

butt 1. Find out that you came to the bank and wanted to make a deposit of 1000 dollars. Your 1000 dollars deposited in the bank today, at bank rates of 10%, will be valued at 1100 dollars tomorrow: the bottom 1000 dollars + hundreds for the deposit 100 (= 1000 * 10%). At one time you can withdraw 1100 dollars per river. If the result is expressed through a simple mathematical formula, then we can deduct $1000*(1+10%) or $1000*(1.10) = $1100.

After two years, 1000 dollars will be converted into $1210 ($1000 plus bonuses for the first river $100 plus bonuses for the other river $110=1100*10%). The formula for increasing the contribution for two years is: (1000*1.10)*1.10 = 1210

Over time, the value of the contribution grows further. To find out how much money you owe in the bank through river, two, etc., you need to multiply the deposit amount by a multiplier: (1+R) n

• de R - Rate per cent, expressed in parts of one (10% = 0.1)
• N – number of rocks

Whose application has 1000 * (1.10) 2 = 1210. It is obvious from the formula (from life itself) that the amount of the deposit in two years will lie at the bank rate of 100. The larger it is, the faster the deposit grows. If the bank interest rate was different, for example, 12%, then after two years you could withdraw approximately 1250 dollars from the deposit, and if you save more precisely 1000 * (1.12) 2 = 1254.4

In this way, you can determine the amount of your contribution at any time. Rozrakhunok of the future wart of pennies English is called "compounding". This term is translated in Russian as “extension” or in English as “compounding”. It is especially less appropriate to translate this word as “increase” or “increase”.

The sense is reasonable - over time, financial contributions increase with additional increases (increase) by side hundreds. On this basis, apparently, the entire banking system is based on a daily (capitalist) model of the world system, at any time - not a penny.

Now let's take a look at this butt from the other end. Let’s say you need to give the Borg to your friend, and you yourself need to pay him $1210 in two days. In this case, you can give him $1000 today, and your friend will deposit this amount in the bank at a market rate of 10% and in two days will withdraw the required amount of $1210 from the bank deposit. That’s two penny flows: $1000 today and $1210 for two days. equivalent one to one. It doesn’t matter what your friend chooses – there are two equally valuable options.

APPLICATION 2. Let’s say that in two days you will need to make a payment of $1500. Why will this amount be of equal value today?

To unlock today's money, you need to use the following formula: divide 1,500 dollars by (1.10) 2, which equals approximately 1,240 dollars. This process is called discounting.

Yakshcho kazati in simple words, That discounting – tse the value of today's supply of a possible penny sum (or, as they say more correctly, a future penny flow).

If you want to realize how many pennies you are either withdrawing or planning to spend in the future, you need to discount this sum at a given rate. This rate is called "discount rate". In other cases, the discount rate is the same as 10%, 1500 dollars is the amount of payment (penny inflow) after 2 years, and 1240 dollars is the same discounted price the next penny stream. In the English language there are special terms for the value of today's (discounted) and future value: future value (FV) and present value (PV). For example, $1500 is a daily production of FV, and $1,240 is a production production of PV.

If we discount, we go from Mayday to today.

Discounting

If we grow up, we will go from today to Maybutday.

Extensions

The formula for the calculation of the discounted price or the discounting formula for this application looks like: 1500 * 1/(1+R) n = 1240.

The mathematical formula will be: FV * 1/(1+R) n = PV. Ask me to write it down like this:

PV = FV * 1/(1+R)n

The coefficient by which the future wartiness will multiply 1/(1+R)n is called the discount factor English word factor means “coefficient, multiplier”.

This discounting formula has: R – the rate of one hundred, N – the number of risks from the date of the future to the current moment.

In this order:

• Compounding or Increment - if you go from today's date to Maybut.
• Discounting or Discounting - if you go from Mayday to today.

These “procedures” allow you to achieve the effect of changing the value of pennies over time.

Of course, all these mathematical formulas are immediately confusing to the basic people, otherwise it’s a shame to remember the essence. Discounting – tse if you want to recognize today's great amount of pennies (which you will need to spend or withdraw).

I hope that now, having understood the phrase “understanding of discounting,” you can explain to someone what is meant by this term.

Vartity has been adjusted – is the Vartity discounted?

In the previous section we understood that

Discounting is the value of the current value of future penny flows.

Is it not so, the word “discounting” has the word “discount” or Russian discount? If you look at the etymology of the word discount, then already in the 17th century it was used to mean “deduction for early payment,” which means “reduction for early payment.” Already, with plenty of fate, people were buying a lot of pennies at that hour. Well, another meaning is possible: discounting - this is the reduction of the discount for the payment of rakhunki. This “decrease” is the measure of the time value of money or the time value of money.

Discounted vartіst – tse the current flow of the future penny stream (that is, the future payment for the payment of the “reduction” for the payment of the Swiss). It is also called induced vartista, from the word “induce.” Talking people in simple words, vartіst is induced - tse Maybutya penny sum, induced until the moment.

To be precise, discounted and induced varity are not absolute synonyms. Therefore, it is possible to direct this as soon as possible until the next moment, and I’ll keep it up to the next moment at the next moment. For example, for the first time it can be said that 1000 dollars, transferred until the next moment (in two years) at a rate of 10% will reach 1210 dollars. That’s what I want to say, that there has been a level of wariness – in a broader sense, there’s no discounting of wariness.

Before speaking, there is no such term in English language. This is our daily Russian wine. In English language there is a term present value and discounted cash flows. And we have the term “discounted” varty, and most often we use the same “discounted” varty.

Discount table

I’ve already done a little bit more discount formula PV = FV * 1/(1+R) n, yaku can be described with the words yak:

The discounted price is the current price, multiplied by a multiplier, which is called the discount factor.

The discount factor is 1/(1+R) n, as can be seen from the formula itself, to be included in the rate of one hundred and the number of periods per hour. In order not to calculate it directly from the discounting formula, use a table that shows the value of the coefficient depending on the percentage of the rate and the number of periods per hour. Sometimes it is called a “discount table,” although this is not the correct term. Tse discount coefficient table, so you can get insurance, as a rule, up to the fourth digit after the coma.

It is very simple to use this table of discount coefficients: if you know the discount rate and the number of periods, for example, 10% and 5 rocks, then the required coefficient will be found on the crossbar of the different columns ient.

butt 3. Let's look at the simplest example. Let's say you need to choose between two options:

• A) withdraw 100,000 dollars today
• B) or 150,000 dollars in one sum exactly after 5 years

What are you vibrating?

If you know that the bank rate for 5-day deposits is 10%, then you can easily figure out that the equivalent amount of 150,000 dollars for withdrawal after 5 years is deposited until the current moment.

The typical discount factor for the table is 0.6209 (discount on the crossbar of the row is 5 years and 10%). 0.6209 means that 62.09 cents, withdrawn today, will increase to 1 dollar before withdrawal in 5 days (at a rate of 10%). Simple proportion:

So, $150,000 * 0.6209 = 93.135.

93,135 — the amount of $150,000 has been discounted (introduced) for withdrawal in 5 years.

That's less than 100,000 dollars today. In this situation, the tit in the hands is truly beautiful, the bottom is a crane in the sky. If we take 100,000 dollars today, put it on deposit with the bank at 10% interest rate, then after 5 years we withdraw: 100,000*1.10*1.10*1.10*1.10*1.10 = 100,000*( 1.10) 5 = 161.050 dollars. This is a great option.

To simplify the calculation (calculation of the next year's profit for the given today's profit), you can also quickly use the table of odds. By analogy with the discount table, this table can be called a table of expansion factors. You can create such a table yourself in Excel if you use the formula for the breakdown of the increment coefficient: (1+R)n.

From this table you can see that 1 dollar today for rates of 10% after 5 years is worth 1.6105 dollars.

With the help of such a table, it will be easy to figure out how many pennies you need to deposit in the bank today if you want to withdraw a sum in the future (without making additional deposits). The situation is a little complicated if you not only want to put money on a deposit today, but also want to quickly add a small sum to your deposit. How to arrange this, read the current statistics. Won is called Annuity formula.

Philosophical insight for those who have read this far

Discounting is based on the famous postulate "hour of penny". If you think about it, this illustration has even deeper meaning. Plant an apple tree today, and after a long period of time your apple tree will grow, and you will pick apples over a long period of time. And if you don’t plant an apple tree today, you won’t be able to taste the apples in the future.

All we need is to believe: plant a tree, start your right, stand on the roads that lead to the end of the world. The sooner we finish our work, the greater the harvest we get at the end of the day. It is necessary to transform the time we are allowed in our lives into results.

“The whole bunch of flowers that bloom tomorrow, plant today.” That's what the Chinese say.

If you are dying about this, do not listen to those who encourage you or doubt your future success. Don’t wait for the furnishings to go away in the future, start your work sooner. Turn an hour of your life into results.

A large table of discount coefficients (appears in the new window):

Invest - this means investing free financial resources today by taking away stable penny flows from the future. How not to have mercy and not only turn back the deposit, but also withdraw the income from the investment?

This article provides not only the formula and value of IRR, but also the application of the breakdown of this indicator (in Excel, graphical) and the interpretation of the results. Two butts from life, with which people’s skin sticks

Basically, the discount rate when analyzing investment projects is the rate at which the investor receives financing. How to unlock it?